New national figures have reiterated what most already know: buying a home in Australia is more unaffordable than ever.

The report from research group Cotality found home prices have risen by almost 50% since 2020.

It’s therefore unsurprising that among aspiring homebuyers, 85% are unable to purchase a home without assistance from government or other sources. Both in Australia and elsewhere, this challenge has motivated policymakers to design new ways to finance home purchases by low-to-moderate income homebuyers, such as via shared equity.

One such measure is the government’s Help to Buy scheme, which will open to applications in the coming weeks.

But how much of a difference might it make? We’ve studied similar schemes internationally, which give us some clues.

Help to Buy is the federal government’s shared equity scheme.

Under shared equity schemes, homebuyers on limited incomes take out a loan on a proportion of the purchase price. The government provides the rest of the capital as an equity partner. This government equity can be understood as an interest-free loan for future repayment.

Government also receives a share of any capital gain on the property equal to the size of that loan as a proportion of the property’s original purchase price.

Under Help to Buy, the federal government contributes up to 30% (on existing homes) or 40% (on new homes) toward the purchase price.........

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